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Saturday, March 28, 2009

Tobacco Shops preparing for the tax hike

A smoke shop that is planning to cut up to 9 workers when April comes. Sure does sound a LOT similar to smoke-free bars laying off workers due to a lack of customers.

It's sad to hear of even tobacco shops laying off workers and eventually some of those shops closing up shop in the long-term. But hey, you can thank the nation's first "colored" president for making those job losses happen.

If I was the first REAL bro for a President unlike him, I wouldn't have signed sh!t about making SCHIP a new law. Unless the funding of SCHIP included making alcoholics and fast food lovers pay more for taxes. The folks behind SCHIP would be filthy rich (in tax collections) if fast food lovers, the obese, and the alcoholics funded that program instead. There are more folks in those groups combined than smokers.*******************************************

The tax increase, he said, may convince more people to roll their own cigarettes, though the tax on that type of tobacco also is increasing exponentially from $1.10 to $24.78 per pound come Wednesday, April 1.

Fairchild figures the business, which he describes as more of a pipe shop that doesn't sell large volume, might even benefit a bit when patrons of nearby bars see how much cigarettes in vending machines cost and look elsewhere for their smokes until the sticker shock wears off.

"Everybody's going to quit smoking when they're going to quit having sex," Fairchild said. "It's not going to happen.

"How many people stopped buying gas when it went up?" he said.

Other tobacco retailers are less certain. The percentage of Ohio adults who smoke has been gradually declining over the past 25 years, according to the Ohio Department of Health. Between 1984 and 2007, the percentage of men who smoked dropped from 31 percent to 24 percent, while the percentage of women who smoked dwindled from 26 percent to 22 percent.

The new tobacco tax could take a further toll on the smoking rate, and some local retailers are concerned it could be another blow to their business.

Ronald Houck, owner of the Wharf at 3464 Pentagon Blvd. in Beavercreek, is concerned the price hike will make his customers even more price-conscious and drive them to his biggest competitor, the Internet.

He's also concerned about the impact of sales on make your own (MYO) tobacco, which accounts for about a fifth of his business. Houck expects to lose 20 percent to 25 percent of his overall business after the tax takes effect, and said he'll cut about half of his nine employees. He also plans to convert part of his retail space into a lounge and charge people who come in to smoke.

Houck doesn't filter his criticism of Congress or of a proposal to raise Ohio's excise tax on tobacco products from 17 percent to 54 percent of the wholesale price, comparing such tax hikes on tobacco to Russia's pogroms.

"We'll survive it, but we're not going to be in very good shape when they get done," Houck said.

Mike Joo, part owner of the Smoke Stop chain of tobacco shops in Franklin, Huber Heights, Miamisburg and Germantown, said the magnitude of the federal tax hike puts his business in uncharted territory.

Some customers have stocked up on roll-your-own tobacco so they can hold off paying higher prices as long as possible, Joo said. Others have said they plan to quit.

"We hope the impact is going to be minimal, but it's all speculation at this point," he said.

The State Children's Health Insurance Program is a good program, Joo said, but "I think the cost should be experienced by everybody, not just people who use tobacco products."